INDIANAPOLIS, September 07,2017 /PRNewswire/ --
Eli Lilly and Company (NYSE: LLY) today announced actions to
streamline operations to more efficiently focus resources on
developing new medicines and to improve its cost structure. Global
workforce reductions, including those from a U.S. voluntary early
retirement program, are expected to impact approximately 3,500
positions.
(Logo:
https://mma.prnewswire.com/media/450388/Lilly_Logo.jpg )
With the streamlining efforts announced, the company expects
annualized savings of approximately $500
million that will begin to be realized in 2018. These
initiatives are part of a broad productivity plan underway at the
company to improve its cost structure, particularly fixed
costs.
"We have an abundance of opportunities-eight medicines launched
in the past four years and the potential for two more by the end of
next year," said David A. Ricks,
Lilly's chairman and chief executive officer. "To fully realize
these opportunities and invest in the next generation of new
medicines, we are taking action to streamline our organization and
reduce our fixed costs around the world."
Ricks continued, "The actions we are announcing today will
result in a leaner, more nimble global organization and will
accelerate progress towards our long-term goals of growing revenue,
expanding operating margins and sustaining the flow of
life-changing medicines from our pipeline."
Streamlining Initiatives
Lilly expects the majority of the positions eliminated to come from
a U.S. voluntary early retirement program, which is being offered
to employees who meet certain criteria. Those who participate will
receive enhanced retirement benefits. The program, announced to
U.S. employees on September 7, 2017,
will be largely completed by December 31,
2017.
Remaining positions will come from other anticipated workforce
reductions, including select site closures. The company will move
production from its animal health manufacturing facility in
Larchwood, Iowa, to an existing
plant in Fort Dodge, Iowa, and
continue productivity improvement efforts around the world. In
addition, a research and development office in Bridgewater, New Jersey, and the Lilly China
Research and Development Center in Shanghai, China, will close as the company
streamlines its pharmaceutical research and development activities.
The company will also further consolidate some work to its existing
shared service centers.
In addition to the U.S. voluntary early retirement program, the
company will determine where it needs to further reduce costs and
improve efficiencies. These efforts will include evaluation of
necessary adjustments to the workforce, with the goal of continued
investment in new medicines and growth. All streamlining efforts
will be consistent with applicable local requirements.
Ricks noted, "The commitment and perseverance of our people, who
never give up on our mission of tackling hard-to-treat diseases,
make up our legacy of more than 140 years. We will implement
changes with fairness and the utmost respect for our Lilly
colleagues, while we remain a vibrant, thriving competitor."
Financial Outlook
Lilly expects to incur charges of approximately $1.2 billion pre-tax or $0.80 per share after-tax, which includes the
estimated participation of the U.S. voluntary early retirement
program, global severance and facility closures. These charges will
be reflected as asset impairment, restructuring and other special
charges in the third and fourth quarters of 2017.
The company's reported earnings per share guidance in 2017 will
be reduced by the amount of the charges. There will be no change to
the company's non-GAAP earnings per share guidance as a result of
these initiatives.
The annualized workforce savings of approximately $500 million will be about equally split to
improve the company's cost structure and reinvest in the business,
including product launches and clinical development for new
indications and line extensions. Lilly confirmed these savings
would improve upon its previous commitment and now expects to
achieve an OPEX-to-revenue ratio of 49 percent or less in 2018.
About Eli Lilly and Company
Lilly is a global healthcare leader that unites caring with
discovery to make life better for people around the world. We were
founded more than a century ago by a man committed to creating
high-quality medicines that meet real needs, and today we remain
true to that mission in all our work. Across the globe, Lilly
employees work to discover and bring life-changing medicines to
those who need them, improve the understanding and management of
disease, and give back to communities through philanthropy and
volunteerism. To learn more about Lilly, please visit us at
www.lilly.com and http://newsroom.lilly.com/social-channels.
C-LLY
This press release contains forward-looking statements (as that
term is defined in the Private Securities Litigation Reform Act of
1995) about the impacts of the streamlining initiatives planned by
Eli Lilly and Company, and reflects Lilly's current beliefs.
However, actual results may differ materially due to various
factors. With respect to the planned cost and headcount reductions,
site closures, and reorganization, there can be no guarantees that
the company has correctly estimated the number or demographic
characteristics of participants in the U.S. voluntary early
retirement program; that the company will be able to achieve the
magnitude of global reductions planned; that the initiatives will
be completed on the anticipated timeline, or at all; or that Lilly
will realize the expected benefits. There are substantial risks and
uncertainties in the processes of product research and development
and commercialization. For further discussion of these and other
risks and uncertainties, please see Lilly's latest Forms 10-Q and
10-K filed with the U.S. Securities and Exchange Commission. Except
as required by law, Lilly undertakes no duty to update
forward-looking statements.
Refer To:
Lauren
Zierke,lauren_zierke@lilly.com; (317)-989-2853 (Media)
Phil
Johnson,johnson_philip_l@lilly.com; (317)-655-6874
(Investors)
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